Posts tagged ‘Microsoft’
The Twitter Business Model
To many, that title seems to be a bit of an oxymoron. The question I am often asked is, “how does Twitter make money?” At the risk of writing yet another commentary on the popular micro-blogging network, I think a bit of an explanation behind how Twitter got to where it is today is in order. I think there is a valuable lesson to be learned in how Twitter, almost by accident, became one of the most powerful social media tools in existence today.
As I have explained previously, Twitter is a simple enough concept – 140 characters, follow people and they follow you, answer the question “What are you doing?”. So why did it grow almost 1400% last year? People already had ways to communicate with each other. Isn’t it a bit of instant messaging combined with e-mail? In my opinion, the answer to “why Twitter?” is simple.
The key is that Twitter would not be nearly as useful, nor successful, without the slew of 3rd party tools built for, and that interact with, the platform. If you ever listen to one of the founders of Twitter talk, you’ll hear that it started out, really, as a side project. It was something created so that developers could communicate with each other while working on another project. What they built was a simple communication platform with an open API (that’s geek talk for a “plug” where you can have the software you write talk with the existing software).
One of the first useful tools to pop up was a search engine that could search the entire “Twitterverse” and identify anytime a particular search term was “Tweeted”. Now you could not only talk with people in your immediate circle, but you could actively search out others talking about topics you were interested in. In business terms, this was the golden goose. Obviously, Twitter felt search was critical enough that it actually bought popular Twitter search provider, Summize, in the summer of 2008. You can now go to http://search.twitter.com and search for any topic you would like. In fact, Twitter has even integrated search into its new home page design.
In no particular chronological order, some of the other tools that made Twitter what it is today are:
Desktop Managers: Much the way Microsoft’s Outlook or Apple’s Mail make e-mail so much more accessible, organized, and useful, a desktop manager makes Twitter so much more useful. No longer do I have to use the limited funtionality of my Twitter web page (though it is improving). I can have my Twitter stream divided into columns so I can see all of the people I follow, my replies, and my direct messages in a single glance. In addition, a good desktop manager will fully integrate search so you can automate your conversation monitoring. My two favorite desktop managers are TweetDeck and Seesmic Desktop. TweetDeck is great for most, however, Seesmic has many added tools for the power user, such as multiple accounts and the ability to automate many different search terms. Both also integrate Facebook status updates. However, I really enjoy Twitscoop integrated into Tweetdeck so I can see the trending topics in the Twitterverse.
Auto Feeders: This allows you to take any RSS feed and automatically shoot it over to your Twitter account with a link. The king of the heap is Twitterfeed, which allows you to now automatically post things like blog posts to Twitter. This can also be extremely powerful when intergrated with a social tagging service. With the addition of this one simple tool, Twitter has become the most powerful content aggregator in existence.
Follower Tracking: Now you can manage who you follow and who follows you with tools such as Friend or Follow. This allows you to quickly see who you are following that is not following you back. In addition, you can see who is following you but you are not following back. You can get a quick idea of who the Spammers are on Twitter and the ones trying to game the system.If you really want a blow to you self-esteem, you can even sign up for Qwitter, which will send you an e-mail when someone stops following you and the last Tweet you sent so you can see if something you say rubs someone the wrong way.
Automated Monitoring: Closely tied to the search functionality, you can use a service such as TweetBeep or TweetLater to automatically e-mail you whenever someone Tweets about a particular search term. It makes conversation monitoring automatic. In addition, with TweetLater, you can automatically follow or unfollow someone when they follow or unfollow you and can schedule Tweets to go out at a later date.
There are literally hundreds of 3rd party applications built on the Twitter platform, and I use that term for a reason. Twitter has really become the backbone communication vehicle. It is up to you to come up with your own cocktail of tools to make it the most useful to you.
The question, then, always come back to how Twitter makes money. The short answer is – they don’t. However, as noted author and smart guy, Don Peppers, says, “what’s more important today, capital or customers?” The answer is obviously customers. If I have customers, I can get capital, yet it is always the capital that we are measured by, isn’t it?
With 32 million unique visitors last month, which was 13 million more than the previous month, Twitter definitely has the customer base. The fact that there is a feeding frenzy from the biggest brands in technology, such as Microsoft, Google, Facebook, Apple, and more throwing 10 figure numbers at Twitter goes to show that where there are customers, there will be money. However, now there are a myriad of ways to monetize a customer base of that size. You can:
- Monetize with the old standard of display advertising (though I wouldn’t recommend it)
- Take the Google approach and go with contextual advertising
- Charge 3rd party software vendors to “plug” into Twitter
- Charge commercial users for added value
- Sell the data to big brands on the back end for focus-group-type purposes
- Charge companies to add increased functionality to their home pages
- Or any one of a plethora of revenue models
Simply put, the possibilities are endless. So the answer is that Twitter may not make money right now, but it possess something much more valuable – the hearts and minds of passionate consumers worldwide.
What about you? What are some of your favorite 3rd party Twitter applications? What are some of the ways you think Twitter might be able to monetize its customer base?
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Idavation – How do you Market a State?
I had the chance to attend a local event yesterday called Idavation. This event is in its 4th year (formerly Kickstart) and was created by the local entrepreneur support organization, Kickstand, in which I have been heavily involved over the last 5 years.
I have been involved in the creative economy here in Boise, for a while now and it finally feels like there is a ground swell beginning to happen. Despite its myriad of national rankings in publications ranging from Fortune to Inc, at times it seems the success the Treasure Valley has seen is nothing more than a happy accident.
To begin with, while there is support from local government, the state government has gone beyond apathy to sheer negligence of the technology and creative industries here in Idaho. Our rankings in research, monetary support for technology, and tax incentives are abysmal. In one of our rankings we are even behind Puerto Rico. Not only does the state government, and Governor Otter specifically, show a complete lack of support for the industry that drives the majority of the state’s growth, at times it seems as if they actively campaign against it.
However, what I see now is a voice that refuses to be silenced. I witnessed entrepreneurs, service providers, and public officials come together together at the Idavation event to discuss how we can continue to grow these industries in Idaho. With a keynote from Gary Hoover (founder of Hoover’s Online) to kick things off, discussion centered around business creation, technology transfer, and how to overcome the negative side effects of doing business from Idaho.
Kickstand has been a fixture in the community for the last 7 years or so, however, now there are other pieces of the ecosystem falling into place. The Watercooler, which I mentioned in a previous post, gives this movement a gathering place. After hearing a couple of speeches from Mayor Dave Bieter of Boise, I firmly believe the City is not only behind the efforts, but donating funds and resources to the cause.
Kickstand has recently launched the Entrepreneur Resource Network (ERN) which is an online directory of service providers for entrepreneurs. A group of technology executives have banded together to create the Idaho Software Employers Alliance in order to encourage computer science education among other support for the technology industry. Funding alliances like the Boise Angel Alliance and Fund and the Keiretsu Forum have active groups in the area and are starting to fund new ventures. Groups have popped up to support and document the tech industry in Boise like TechBoise. Even the local university, Boise State, has changed its mission to become a “Metropolitan Research University of Distinction”.
Putting my marketing hat on, if I were to take Governor Otter through a strategy session, it would go something like this. First, can Idaho be number one in agriculture? It can hold its own, but it is definitely not number one. Heck, Idaho is almost not even number one in potatoes anymore since Washington keeps stealing its market share. The reality is that agriculture is the past. You still want to maintain a strong agricultural base, but if Idaho were to focus its efforts on raw goods, it would experience declining terms of trade. As the picture below shows, except for a blip during World War II, generally raw goods decrease in price over time. (By the way, I stole this from Professor Roy Nelson’s PowerPoint at Thunderbird School of Global Management)
However, what Idaho does have going for it are some of the biggest rankings and PR of any state for technology and business creation. Idaho and Boise regularly receive accolades from Forbes, Fortune, and Inc for being a technology hotbed, being a great place to start a business, and for being a great place to work and play. Boise has two key anchor employers in HP and Micron and now with the addition of Microsoft, has several of the biggest names in technology right here. It has all of the previously mentioned efforts working in conjunction with each other to create a ripe technology environment. It appears that technology and entrepreneurism are the future of Idaho.
How do you market a state? You pick what it is that you do best and you focus. It is the same principles that apply to any business venture. If politicians thought more like business people, then states would be better at positioning themselves to grow. If you try to mean everything to everyone, you end up meaning nothing to nobody. It is amazing what a unique vision can do to rally the resources of an entire state around a core cause.
